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Tips for filing 2017 tax returns

Know what's in your return before signing, tax-preparer says

Tax-filing season has begun, with this year's deadline landing on Tuesday, April 17, according to irs.gov. (Ken Teegardin / SeniorLiving.org)

If the frequent commercials for Turbo Tax and H&R Block airing on TV lately haven't been enough of a clue, tax-filing season is underway.

For lots of people, even thinking about filling out income tax return forms can be enough to stress them out.

With that in mind, the Fort Morgan Times spoke with a local tax-preparation professional to get some tips on what to watch out for with 2017 tax returns. Those forms are due April 17 this year.

There is not too much changing with income taxes right now from last year, Martin Dasovich said, with the bigger changes that have been in the news affecting next year's filing season.

His company, Dasovma Consulting, offers tax preparation, accounting and business consulting services in eastern Colorado and western Nebraska.

"The key thing is, depending on the person's situation, it's probably in their best interest to go to a professional," Dasovich said. "That's what they do."

Accountants and tax-preparation professionals are trained in the ever-changing regulations and laws related to income and business taxes, Dasovich said, which may not be the case with those who only get involved with taxes during tax season.

"Avoid going to the fly-by-nights," Dasovich said. "The retail tax companies, they're there all the time, but they have seasonal staff. There are a lot of repeat performers, but they have minimal training. They're good for cranking out basic returns, but they don't know how to delve into anything complex."

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And keeping track of and having at hand all 2017 tax-related documents is an important part of being ready to fill out and then file a tax return, Dasovich said.

"If you get any sort of document in the mail that says 'important tax document,' make sure you bring it with you" to a tax-preparation appointment, he said. "It may have some kind of impact."

Those who are able to file basic tax returns, such as the 1040EZ, likely could do that on their own, Dasovich said, but those are easily handled by the retail tax companies or tax-preparation software, too.

"If it's your basic return, that's all fine and good," he said of tax-preparation software. "Tax preparation software is not going to have that live person experience. You may not know what it's asking you or what it's not asking."

Dasovich pointed out that with taxes, "there's a black, a white and a whole lot of gray," and tax-preparation software is not always good with handling the gray areas.

He also warned that only taking the documents and plugging the numbers into software or at a tax-preparation appointment without getting asked more questions about them could mean missing something.

One of the big questions was "did you move?" he said.

That or any other major life changes, such as getting married or having children, could mean qualifying for various tax deductions.

"All those have tax implications," Dasovich said.

Not all such life changes will mean deductions, though, and tax-filers "have to take the good with the bad" when filling out the forms.

A common mistake he sees with taxes is not properly factoring in any money added to or taken out of a retirement plan.

"Taking money out can have tax ramifications, but putting money in can have an added benefit," he said, and these need to be examined closely by the tax-preparer to ensure the least negative impact or greatest benefit.

Another thing to watch for is anything related to property sales or purchases, which can involve a number of deductions or penalties, depending on how they were handled.

Education credits also are available, and that can be a good way to lower how much a person owes or increase a tax refund, Dasovich said.

"If you have anybody going to school, there are myriad tax credits available," he said.

But the earned income credit is one he suggested people be careful when claiming, especially for any people with children who have gone through a divorce or are married but filing separately. Claiming the earned income credit can be a cause of an audit if anything looks even a little suspicious to an Internal Revenue Service official.

Dasovich said the "nastiest ramifications" can be felt from people claiming the earned income credit improperly, especially when the same children are claimed on multiple returns.

For those who have "side gigs" to earn a little extra money, Dasovich said watch out for any 1099 forms coming in the mail from those jobs. Typically, the threshold for this is earning $600 in a year, he said.

But people also can factor in their expenses from what they earn from odd jobs, home-based businesses or other side gigs, he said.

"Make sure you're keeping track of all expenses," Dasovich said, since that could offset all or part of the extra income and having to report it.

For those who find themselves having to file self-employment taxes, he pointed out that it really is mainly cover the 15 percent that would be paid by an employer for Medicare and Social Security. If it is owed, make sure to file it or it could lead to a major penalty in an audit.

And there is no such thing as an "audit-proof" tax return he said, especially with the IRS's random audit program.

Dasovich said the key thing was to "do the right thing" when filling out tax returns. When faced with a choice, err on the side of caution if worried about a potential audit.

"Go with where you're comfortable," he said.

Also important is understanding what is in the tax return so that if questions are raised, they will be easy to answer.

"Make your tax-preparer go through it with you until you understand it," Dasovich said. "You sign it, so it ultimately comes down to you."

If an audit does happen, "the main thing is not to panic," he said. "Gather your data, use your best defense and then pick your battles."

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